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Increasing tax revenues: Major Tanzania tax reforms in offing

Posted on January 21, 2016 · Posted in Taxation and development
Dr Likwelile

Dr Servacius Likwelile; Tanzania’s Permanent Secretary for Treasury asking for Tax stakeholder views on tax reforms

Major tax reforms are in the offing as government searches for alternative longterm solutions to boost its tax revenue collections during the 2016/17 fiscal year and years to come.

Overtime, the current tax system has been widely criticized as flawed with excessive tax exemptions, over reliant on indirect taxes and largely dependent on a small tax base. The system has also been criticized as vulnerably exposed to tax avoidance and evasion.

In a public advert issued by the Ministry of Finance, the government was now seeking stakeholder participation and contribution of suggestions to improve the current tax system and the overall fiscal policy. The fiscal policy aims at increasing the tax base, strengthening tax administration and tax collection procedures as well as controlling tax evasion. In its corporate commitments Tanzania Revenue Authority (TRA) plans to increase its domestic revenue collection by 70% and overall tax to GDP ratio from the current 14% to 19.9% by 2018.

It is the Government’s intention to ensure that the tax system provides a conducive environment for investment that will bring about economic growth. The Task Force (on tax reform current based at the Ministry of Finance) invites the participation of officials from the Government, the private sector, civil society, religious organizations, academic community, research institutions and other specialist in public sector economics.

Submission in writing, from interested parties, clearly stating which firms(s) organization(s) or association(s) is being represented; The proposed changes in tax or non-tax revenue, including an analysis of the sectors, regions or types(s) of taxpayers that would be affected, and in what way;

The projected impact on the economy and on government revenues in the year of implementation and in future years;  The rationale and justification for the proposed revenue policy changes and in particular, analysis of the means by which the proposal will help the Government achieve its overarching economic, fiscal and poverty-reduction objectives; and  Where proposals entail a reduction in Government revenues (even if only in the short term), proposals must set out explicit and credible measures-consistent with the overall thrust of the Government’s fiscal policies-to offset the proposed revenue shortfall.

Kidanka TRA Boss 2

Mr Alphayo Kidanka, TRA Director General: The Man Charged with a neblous task of increasing tanzania’s tax collections

The proceedings of the Task Force on Tax Reform in preparation for Budget 2016/17 are scheduled to get underway in February 2016. The Task Force Secretariat will again this year arrange a schedule of meetings with stakeholders for presentation and discussions. The Government will take lead by giving an update of its policy objectives, agenda and challenges and its assessment of tax policy priorities for Budget 2016/17.

This will provide participants with the broad context for this year’s proceeding and motivate analysis and discussion of the impacts of the various proposals on a deeper and broader level. The fiscal policy aims at increasing the tax base, strengthening tax administration and tax collection procedures as well as controlling tax evasion.

The Task Force has provided a structured forum for discussion of the various issues related to tax policy and administration and this work has constituted a vital input to policymakers for a long time now. This has helped to shape the country’s tax regime and, through dialogue and analysis, it has facilitated an effective, transparent and efficient resolution of a number of issues.

‘We are looking forward to continue with productive exchange of ideas this year, between economic stakeholders and the Government’, the advert stated.